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Interest Rate Sensitivity of Investment Projects
A company is considering two potential investment projects. Project Alpha requires a large initial outlay and promises a significant single return ten years from now. Project Beta requires a much smaller initial outlay and promises a modest single return one year from now. Assuming both projects are currently considered marginally profitable, explain which project's viability is more sensitive to an increase in the market interest rate. Justify your answer by describing how the value of future returns is determined.
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